Anticipating climate change
An increasing number of companies are considering climate risks. How can you review your strategy and economic model to reduce your exposure and adapt to the carbon-neutrality objective?
In 2016, oil giant ExxonMobil lost one of its main shareholders, the Rockefeller family. The heirs of the group’s founder deemed too timid its strategy to move away from fossil energies. Quite a symbol! Long confined to debates among experts, the climate change issue is nowadays ubiquitous. And not only in the media or opinion polls: today, regulators, shareholders and consumers all place increasing pressure on companies for them to fully shoulder their climate responsibility.
Indeed, climate-related risks, largely considered as virtual for a long time, are now concretely showing. For example, AT&T spent 874 million dollars in repairs over a 3-year period, following natural disasters that the company attributes to climate change. Reinsurance firm Swiss Re saw a sharp rise in compensations linked to extreme climate events: 2.7 billion dollars more than forecasted for the 2017 fiscal year. Even when companies are not directly affected, they start suffering from chain reactions: food produce price volatility because of more intense and frequent droughts, geopolitical instability, difficulties in procurement, etc. Scientists have established that these types of repercussions will certainly increase in the decades to come. Companies must thus anticipate disruptions such as modified seasonal cycles, lower agricultural yields and a decrease in productivity of the staff working outdoors, increased competition—or even conflicts—for the use of rare resources.
In parallel, regulators around the world rally behind the recommendations of the IPCC—notably to reach carbon neutrality by 2050 to avoid the worst scenarios. Several large companies have chosen to anticipate this change rather than suffering it: they make commitments at various timescales and start decarbonizing their operations. This is for example the case of H&M, Toyota, Schneider Electric, Vinci, etc.
For many companies, the question no longer is: “Should we engage in a low carbon transformation?” but rather: “How can we do it?”. We have gathered here some advice to further their thinking.
In this synopsis:
– Evaluating your exposure to climate risks
– Five pieces of advice to build your climate strategy
– Talking of the climate risk to skeptics
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